Gold is within spitting distance of its all-time highs…
The metal’s current record is $2,063.54 an ounce, set in August 2020. And it was close to breaking that level in March 2022.
Earlier this month, it rose right up to that level and has been trading sideways ever since. Now, a bullish pattern shows that we could soon see a new high.
Today in DailyWealth, we’re going to take a deeper look into this pattern. And we’ll use it to project how much higher gold could go once it breaks out…
Gold was on a two-year hot streak from 2018 into 2020. The metal rose 75% from August 2018 into August 2020.
That’s a huge boom in just two years.
These kinds of sprints higher can’t last forever. Eventually, gold would have to take a breather… and then trade sideways as it “digests” its gains.
That’s exactly what we’ve seen. Gold has been trading between $1,600 and that $2,063 high ever since. Take a look…
This is what it looks like when an asset cools off after such a big run. You can see that it has tested that $2,063 high two times since – once in March 2022 and once earlier this month.
Its previous high might not be the record much longer, though. That’s where our technical pattern comes in today…
Let’s take a wider view of gold’s price action since 2018. Again, the metal soared to its August 2020 high. And as we showed you earlier, it has been trading sideways ever since… forming a “bull flag.”
The big rally higher is the flagpole. And the sideways action creates the flag. When the asset breaks out of this range, it typically moves quickly.
You can see the recent pattern in the chart below…
A flag is a continuation pattern. All that means is the asset tends to continue the previous trend once it breaks out. So if gold was soaring before the flag pattern, it will likely rally higher after.
Gold started rallying from $1,200 an ounce in 2018 all the way up to $2,063 in August 2020. Today, we can use this pattern to see how high gold could run once it breaks out. We do this by determining the length of the flagpole.
The flagpole itself is $863 tall ($2,063 – $1,200 = $863). We simply add that to the breakout point, which is also about $2,063. That gives us a target price for gold of $2,926, or 42% higher than the previous high.
Again, gold hasn’t broken out just yet… It could trade sideways for a little longer before that happens. But given that it has been trading in this range for more than two years, and we’re only 4.4% away from the high, we’re likely close to the breakout.
Once that happens, another furious rally in gold is likely to get underway. The metal could run to nearly $3,000 an ounce. And the time to position yourself to profit is today.
Good investing,
Chris Igou
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Source: Daily Wealth